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"Both Terminix and American Home Shield continue to perform well with new services driving growth at Terminix and our investment in marketing yielding accelerated top line growth at AHS."

MEMPHIS, Tenn.--(BUSINESS WIRE)--ServiceMaster
Global Holdings, Inc. (NYSE: SERV), a leading provider of
essential residential and commercial services, today announced
preliminary unaudited second-quarter 2015 results. The company reported
second-quarter 2015 revenue of $716 million, an increase of 5 percent
compared to the same period in 2014. The increase in revenue was driven
by strong organic growth at American Home Shield (“AHS”), increased
sales of new services at Terminix and price increases, partially offset
by lower demand for traditional termite services.

The company reported second-quarter 2015 net income of $67 million or
$0.49 per share, including a loss on extinguishment of debt of $14
million related to the company’s redemption of its 8% Senior Notes,
versus $40 million or $0.44 per share in the same period in 2014.

The company reported second-quarter 2015 adjusted net income of $82
million, or $0.60 per share, versus $52 million, or $0.56 per share, for
the same period in 2014. Earnings per share and other share data
contained in this release reflect 136.5 million and 92.2 million diluted
share counts for the second quarter ended June 30, 2015 and 2014,
respectively.

The company reported second-quarter 2015 Adjusted EBITDA of $191
million, an increase of $20 million or 12 percent compared to the same
period in 2014. The increase was largely driven by Adjusted EBITDA
increases at AHS and Terminix of $10 million and $8 million,
respectively.

Rob Gillette, ServiceMaster’s chief executive officer, noted “Both
Terminix and American Home Shield continue to perform well with new
services driving growth at Terminix and our investment in marketing
yielding accelerated top line growth at AHS.”

Preliminary Consolidated Performance

Three Months Ended June 30,

Six Months Ended June 30,

$ millions

2015

2014

B/(W)

2015

2014

B/(W)

Revenue

$

716

$

683

$

33

$

1,288

$

1,216

$

72

YoY growth

4.8

%

5.9

%

Gross Margin

351

332

19

620

577

43

% of revenue

49.0

%

48.6

%

0.4

pts

48.1

%

47.5

%

0.6

pts

SG&A

(182

)

(178

)

(4

)

(334

)

(329

)

(5

)

% of revenue

25.4

%

26.1

%

0.7

pts

25.9

%

27.1

%

1.2

pts

Income from Continuing Operations before Income Taxes

109

80

29

154

53

101

% of revenue

15.2

%

11.7

%

3.5

pts

12.0

%

4.4

%

7.6

pts

Income from Continuing Operations

67

42

25

95

24

71

% of revenue

9.4

%

6.1

%

3.3

pts

7.4

%

2.0

%

5.4

pts

Net Income (Loss)

67

40

27

94

(73

)

167

% of revenue

9.4

%

5.9

%

3.5

pts

7.3

%

(6.0

)

%

13.3

pts

Adjusted Net Income(1)

82

52

30

127

75

52

% of revenue

11.5

%

7.6

%

3.9

pts

9.9

%

6.2

%

3.7

pts

Adjusted EBITDA(2)

191

171

20

324

286

38

% of revenue

26.7

%

25.0

%

1.7

pts

25.2

%

23.5

%

1.7

pts

Pre-Tax Unlevered Free Cash Flow(3)

192

156

36

338

267

71

Preliminary Segment Performance

Revenue and Adjusted EBITDA for each reportable segment and
Corporate are as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Revenue

Adjusted EBITDA

Revenue

Adjusted EBITDA

$ millions

2015

B/(W) vs. PY

2015

B/(W) vs. PY

2015

B/(W) vs. PY

2015

B/(W) vs. PY

Terminix

$

395

$

19

$

101

$

8

$

731

$

35

$

190

$

19

YoY growth / % of revenue

5.1

%

25.6

%

0.9

pts

5.0

%

26.0

%

1.4

pts

American Home Shield

261

20

71

10

436

43

100

17

YoY growth / % of revenue

8.3

%

27.2

%

1.9

pts

10.9

%

22.9

%

1.8

pts

Franchise Services Group

60

(4

)

20

(1

)

120

(4

)

39

1

YoY growth / % of revenue

(6.3

)

%

33.3

%

0.5

pts

(3.2

)

%

32.5

%

1.9

pts

Corporate(4)

1

(1

)

(1

)

3

1

(2

)

(5

)

1

Total

$

716

$

33

$

191

$

20

$

1,288

$

72

$

324

$

38

YoY growth / % of revenue

4.8

%

26.7

%

1.7

pts

5.9

%

25.2

%

1.7

pts

A reconciliation of income from continuing operations to both adjusted
net income and Adjusted EBITDA, as well as a reconciliation of net cash
provided from operating activities from continuing operations to pre-tax
unlevered free cash flow, are set forth below in this press release.

Terminix

Terminix, which provides termite and pest control services to
residential and commercial customers and distributes pest control
products, reported a 5 percent revenue increase in the second-quarter of
2015 compared to the second-quarter of 2014. The revenue increase was
primarily driven by increased sales of new services and improved
pricing, partially offset by lower demand for traditional termite
services. Adjusted EBITDA increased 9 percent or $8 million versus prior
year, driven primarily by the flow-through effect of higher revenue,
partially offset by higher selling costs during the quarter.

American Home Shield

American Home Shield, which provides home warranties for household
systems and appliances, reported an 8 percent revenue increase in the
second-quarter of 2015 compared to the second-quarter of 2014, driven by
organic growth and price increases. Adjusted EBITDA increased 16 percent
or $10 million versus prior year, primarily reflecting the flow-through
effect of higher revenue, partially offset by an increase in claim
costs. The company increased marketing spend by $5 million compared to
the second quarter 2014 which was offset by a gain on the sale of
investments realized during the quarter.

For the six months ended June 30, 2015, net cash provided from operating
activities from continuing operations increased to $210 million from
$149 million for the six months ended June 30, 2014.

Net cash used for investing activities from continuing operations was
$20 million for the six months ended June 30, 2015 compared to $36
million for the six months ended June 30, 2014.

Net cash used for financing activities from continuing operations was
$213 million for the six months ended June 30, 2015.

On February 17, 2015, the company redeemed $190 million of the 8% Senior
Notes due 2020 using cash on hand. As part of the transaction, the
company paid an $11 million pre-payment premium.

On April 1, 2015, the company redeemed the remaining $200 million of the
8% Senior Notes due 2020. As part of the transaction, the company paid
$14 million in fees and pre-payment premium. To redeem the $200 million
8% Senior Notes, the company used $39 million in cash and incurred
incremental borrowings of $175 million under its term loan facility to
finance the remaining portion of the redemption.

For the six months ended June 30, 2014, net cash used for financing
activities from continuing operations was $54 million, largely
consisting of a $35 million contribution to TruGreen Holding Corporation
as part of the spin-off transaction.

Pre-tax unlevered free cash flow(3) was $338 million for the
six months ended June 30, 2015, compared to $267 million for the six
months ended June 30, 2014.

Other Matters

On June 2, 2015, certain selling stockholders, including investment
funds sponsored by, or affiliated with, Clayton, Dubilier & Rice, LLC,
the company’s principal stockholder, sold 20 million shares of common
stock in a secondary offering. On June 12, 2015, the underwriters of the
secondary offering exercised their option to purchase an additional 3
million shares of common stock pursuant to the underwriting agreement.
The company did not receive any proceeds from the sale of the aggregate
23 million shares of common stock by the selling stockholders.

As previously reported, in April 2014, the Consumer Financial Protection
Bureau (the “CFPB”) issued a Civil Investigative Demand to AHS seeking
documents and information related to the Real Estate Settlement
Procedures Act and its implementing regulation (“RESPA”) and other laws
enforceable by the CFPB. AHS believes that it has complied with RESPA
and other laws applicable to AHS’s home warranty business. AHS provided
the CFPB with materials in response to the CFPB’s request. On June 25,
2015, the CFPB informed AHS by letter that it has completed its review
and does not intend to take any enforcement action.

On July 16, 2015, the company gave notice that it has elected to redeem
in full $488 million of the 7% Senior Notes due 2020 on August 17, 2015.
The company expects to record in the third quarter of 2015 a $31 million
loss on the extinguishment debt, of which $25 million is a pre-payment
premium on the 7% Senior Notes and $6 million is the write-off of debt
issuance costs. To redeem the 7% Senior Notes, the company anticipates
using a combination of cash and incremental borrowings under a term loan
facility. The redemption is subject to satisfaction of specified
conditions precedent, including, without limitation, consummation of
availability of financing on terms and conditions satisfactory to the
company.

Full-Year 2015 Outlook

The company anticipates that revenue will be between $2,570 million and
$2,590 million, a 5 percent increase compared to 2014. Adjusted EBITDA
is anticipated to be at least $610 million for the full-year 2015, an
increase of approximately 10 percent compared to 2014.

Second-Quarter 2015 Earnings Conference Call

The company will discuss its second-quarter 2015 operating results
during a conference call at 8 a.m. central time today, August 4, 2015.
To participate on the conference call, interested parties should call
800.706.9302 (or international participants, 303.223.2688).
Additionally, the conference call will be available via webcast. A slide
presentation highlighting the company’s results and key performance
indicators will also be available. To participate via webcast and view
the slide presentation, visit the company’s investor relations home
page at www.servicemaster.com.

The call will be available for replay until September 3, 2015. To access
the replay of this call, please call 800.633.8284 and enter reservation
number 21772159 (international participants: 402.977.9140, reservation
number 21772159). Or you can review the webcast on the company’s
investor relations home page.

About ServiceMaster

ServiceMaster Global Holdings, Inc. is a leading provider of essential
residential and commercial services, operating through an extensive
service network of more than 8,000 company-owned locations and franchise
and license agreements. The company’s portfolio of well-recognized
brands includes American Home Shield (home warranties), AmeriSpec (home
inspections), Furniture Medic (furniture repair), Merry Maids
(residential cleaning), ServiceMaster Clean (janitorial), ServiceMaster
Restore (disaster restoration) and Terminix (termite and pest control).
The company is headquartered in Memphis, Tenn. Go to www.servicemaster.com
for more information about ServiceMaster or follow the company at
twitter.com/ServiceMaster or Facebook.com/ServiceMaster.

Information Regarding Forward-Looking Statements

This press release contains forward-looking statements and cautionary
statements. Some of the forward-looking statements can be identified by
the use of forward-looking terms such as “believes,” “expects,” “may,”
“will,” “shall,” “should,” “would,” “could,” “seeks,” “aims,”
“projects,” “is optimistic,” “intends,” “plans,” “estimates,”
“anticipates” or other comparable terms. Forward-looking statements are
subject to known and unknown risks and uncertainties, many of which may
be beyond our control, including, without limitation, the risks and
uncertainties discussed in the “Risk Factors” and “Information Regarding
Forward-Looking Statements” sections in the company’s reports filed with
the U.S. Securities and Exchange Commission. We caution you that
forward-looking statements are not guarantees of future performance or
outcomes and that actual performance and outcomes, including, without
limitation, our actual results of operations, financial condition and
liquidity, and the development of the market segments in which we
operate, may differ materially from those made in or suggested by the
forward-looking statements contained in this press release.

Additional factors that could cause actual results and outcomes to
differ from those reflected in forward-looking statements include,
without limitation, the effects of our substantial indebtedness; changes
in interest rates, because a significant portion of our indebtedness
bears interest at variable rates; lawsuits, enforcement actions and
other claims by third parties or governmental authorities; compliance
with, or violation of environmental health and safety laws and
regulations; weakening general economic conditions; weather conditions
and seasonality; the success of our business strategies, and costs
associated with restructuring initiatives. The company assumes no
obligation to update the information contained herein, which speaks only
as of the date hereof.

Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures, which
are not measures of financial condition or profitability. Non-GAAP
measures should not be considered as an alternative to GAAP financial
measures. Non-GAAP measures may not be calculated or comparable to
similarly titled measures used by other companies. See non-GAAP
reconciliations below in this press release for a reconciliation of
these measures to the most directly comparable GAAP financial measures.
Adjusted EBITDA, adjusted net income and pre-tax unlevered free cash
flow are not measurements of the company’s financial performance under
GAAP and should not be considered as an alternative to net income or any
other performance measures derived in accordance with GAAP or as an
alternative to net cash provided by operating activities or any other
measures of the company’s cash flow or liquidity. We believe these
non-GAAP financial measures are useful for investors, analysts and other
interested parties as it facilitates company-to-company operating and
financial condition performance comparisons by excluding potential
differences caused by variations in capital structures, taxation, the
age and book depreciation of facilities and equipment, restructuring
initiatives, consulting agreements and equity-based, long-term incentive
plans.

_________________________________________________

(1)

Adjusted net income is defined by the company as income (loss)
from continuing operations before: amortization expense;
impairment of software and other related costs; consulting
agreement termination fees; restructuring charges; gain on sale of
Merry Maids branches; management and consulting fees; loss on
extinguishment of debt; and the tax impact of all of the
aforementioned adjustments. The company’s definition of adjusted
net income may not be comparable to similarly titled measures of
other companies.

(2)

Adjusted EBITDA is defined as income (loss) from continuing
operations before: depreciation and amortization expense; non-cash
impairment of software and other related costs; non-cash stock-based
compensation expense; restructuring charges; gain on sale of Merry
Maids branches; management and consulting fees; consulting agreement
termination fees; provision (benefit) for income taxes; loss on
extinguishment of debt; interest expense; and other non-operating
expenses. The company’s definition of Adjusted EBITDA may not be
comparable to similarly titled measures of other companies.

The following table presents reconciliations of Adjusted EBITDA to
Income from Continuing Operations for the periods presented.

Three Months Ended

Six Months Ended

June 30,

June 30,

(In millions)

2015

2014

2015

2014

Terminix

$

101

$

93

$

190

$

171

American Home Shield

71

61

100

83

Franchise Services Group

20

21

39

38

Corporate

(1

)

(4

)

(5

)

(6

)

Adjusted EBITDA

$

191

$

171

$

324

$

286

Depreciation and amortization expense

(24

)

(26

)

(48

)

(51

)

Non-cash impairment of software and other related costs

—

1

—

(47

)

Non-cash stock-based compensation expense

(2

)

(1

)

(5

)

(3

)

Restructuring charges

—

(1

)

(2

)

(6

)

Gain on sale of Merry Maids branches

2

—

3

—

Management and consulting fees

—

(2

)

—

(4

)

Provision for income taxes

(42

)

(38

)

(59

)

(29

)

Loss on extinguishment of debt

(14

)

—

(27

)

—

Interest expense

(42

)

(61

)

(88

)

(122

)

Other non-operating expenses

(1

)

(1

)

(3

)

—

Income from Continuing Operations

$

67

$

42

$

95

$

24

The table below presents selected operating metrics related to renewable
customer counts and customer retention for our Terminix and American
Home Shield segments.

As of June 30,

2015

2014(1)

Terminix—

Reduction in Pest Control Customers

(1.2

)

%

(0.6

)

%

Pest Control Customer Retention Rate

79.3

%

79.9

%

Reduction in Termite and Other Services Customers

(1.9

)

%

(2.8

)

%

Termite and Other Services Customer Retention Rate

85.4

%

84.8

%

American Home Shield—

Growth in Home Warranties

7.0

%

11.7

%

Customer Retention Rate

75.2

%

75.5

%

__________________________________

(1) As of June 30, 2014, excluding the Home Security of America
(“HSA”) accounts acquired on February 28, 2014, the growth in home
warranties was two percent, and, excluding all HSA accounts, the
customer retention rate for our American Home Shield segment was
75 percent.

Terminix Segment

Revenue by service line is as follows:

Three Months Ended

% of

June 30,

Revenue

(In millions)

2015

2014

2015

Pest Control

$

205

$

191

52

%

Termite and Other Services

168

164

43

%

Other

22

21

5

%

Total revenue

$

395

$

376

100

%

Termite renewal revenue comprised 47 percent and 49 percent of total
revenue from Termite and Other Services for the three months ended
June 30, 2015 and 2014, respectively.